Which Labor Agency Knows Best?

By Daniel B. MoskowitzBy Daniel B. MoskowitzJune 17, 1985

A judicial controversy that has been lurking in the shadows for a decade has been spotlighted anew by a May 8 ruling from the U.S. Court of Appeals in Boston. At stake is just who should have the most clout when issues of job safety and occupational health get into the courts. This time, the U.S. Supreme Court may have to lay down a national rule.

Judges are supposed to defer to the expertise of regulatory agencies when a dispute over one of their decisions is taken to an appellate court. The agencies are presumed to know best what their own rules mean, so on a close call their views are given extra weight. But it's hard to carry that concept over to the occupational safety area, because there are two agencies: the Occupational Safety and Health Administration in the Labor Department, which actually draws up the rules and issues citations to erring employers, and the independent Occupational Safety and Health Review Commission, which listens to appeals from OSHA decisions. It's a unique hybrid, fashioned by Congress to try to answer business fears that leaving all enforcement in the hands of the Labor Department would produce results that were unfairly pro-worker.

OSHA and OSHRC do not always see eye to eye. Appellate courts in Richmond, Cincinnati and St. Louis decided in the mid-1970s that when there was such a conflict, they would defer to the commission. But at about the same time, the appellate courts in New Orleans and Denver ruled that they would give greater weight to the views at OSHA. And the judges in the Philadelphia court decided that any disagreement between the experts freed them to pick the most reasonable interpretation of the law, without deferring to either agency.

The issue has been revived by the Boston court's ruling in Donovan v. A. Amorello & Sons, which came out on the side of the Labor Department. "Practical administrative considerations favor looking to OSHA for a more authoritative interpretation of the regulation," Judge Stephen Breyer explained. "Since OSHA employes choose the language of the regulation, OSHA is more likely to have an institutional memory of the regulation's purposes and meaning."

In the Amorello case, OSHA had cited a construction company for running a front-end loader in reverse without an alarm ringing. OSHRC felt that the regulation demanding such an alarm when the driver of equipment cannot see what is behind the vehicle did not apply, because the operator's view was blocked for only a couple of feet.

In other cases, courts ruled that:

* A business will have a hard time trying to depreciate works of art used to decorate its office. The U.S. Court of Appeals in Cincinnati sided with the Internal Revenue Service in throwing out an attempt by a group of gynecologists to depreciate over a 10-year period the $75,000 spent on art as part of the overall office decor. The furnishings and even the cost of the design itself can be written off over 10 years, because, as a general rule, after that long it is time for a complete overhaul. But the judges said there is no evidence showing that the art works will be useful to the clinic for any set period of time, nor is there any sound way to estimate how much the doctors could get for the art if, in a decade, they wanted replacements. So no depreciation at all was permitted. (Associated Obstetricians v. Commissioner, May 14)

* The Securities and Exchange Commission cannot keep accountants out of its formal investigative proceedings if a witness wants a financial expert there. The commission has a rule that allows only lawyers to accompany witnesses, but the U.S. District Court here in Washington found the rule makes little sense. The opinion notes that having nonlawyer experts in the hearing room would be less disruptive than what happens under the rule: Lawyers stop the questioning and go outside the room to consult in the hallway with accountants. The court says it will refuse to enforce subpoenas for witnesses to appear at commission investigations unless the SEC lets those who want to bring along their financial experts. (SEC v. Whitman, April 15)

* When a state sets out to combat racial bias, it has to look beyond its own borders. The Alaska Supreme Court tossed out an order from the state Commission on Human Rights because it took too narrow a view of its authority. The commission found that blacks were unlawfully discriminated against in selecting welder helpers to build the Trans-Alaska Pipeline, and ordered the union to see that in the future, at least 2.2 percent of all its referrals for such jobs were blacks. The 2.2 percent figure represents the percentage of blacks in the population of the arctic state. But the high court noted that most of the welder helpers on the project were recruited in the southern United States, where 38 percent of the population is black. The commission must take that labor source into consideration, the ruling said, and come up with a hiring quota much closer to the 38 percent level. (Neither side in the case disputed the power to the commission to set racial hiring targets, so the justices did not rule on that issue.) (Adams v. Pipelines Union, May 10)

The "Baby FTC Acts" on the books in many states cannot be used to prosecute securities fraud. Investors who thought they had been hurt in a reverse stock split tied to a merger deal sued under the North Carolina law against unfair trade practices, one of the many statutes that try to do on a state level what the FTC act does on a federal level. But the U.S. Court of Appeals in Richmond refused to stretch the consumer protection legislation to issues of what is fair or unfair in a stock transaction. Securities already are regulated by both state and federal laws, the judges pointed out, and treating them like other trade arrangements would just lead to "overlapping supervision and enforcement." (Lindner v. Durham Hosiery Mills, May 6)